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No more ‘same old, same old’ for Canada’s labor unions

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TORONTO The widely held stereotype of Canadians being a polite, respectful and orderly bunch can be quickly shattered by looking at the country's long history of acrimonious labor disputes in the mining sector.

Extracting Canada's rich bounty of mineral resources is only possible by employing a work force that is organized and largely unionized, setting the stage for heated confrontations that frequently result in work stoppages and the occasional picket line scuffle.

To resolve differences, negotiators must get to know one another, understand each other's motives and limits, and build credibility within a long-term relationship. But a dramatic change in the corporate landscape over the past few years has meant rebuilding these partnerships.

Much of Canada's big mining operations are now under foreign ownership. Xstrata Plc, Vale and Rio Tinto have replaced names such as Falconbridge Ltd., Inco Ltd. and Alcan Inc. that were around for generations. With global multinationals now in control, negotiators for the Canadian Auto Workers union and the United Steelworkers union, which vehemently opposed the foreign acquisitions, find themselves in uncharted territory. While many of the same company negotiators remain at the table, the people who hold the purse strings now reside thousands of miles away in boardrooms where Canadian operations are just one small piece of their global business empire.

So far, the verdict is still out on whether foreign ownership has helped or hindered labor-management relations. In early 2007, executives with Switzerland-based Xstrata reached a new three-year pact with the CAW at the former Falconbridge-branded Sudbury, Ontario, operations, the first time in a decade that workers there signed a contract without a work stoppage. In September, Vale Inco Ltd. workers in Thompson, Manitoba, gave their blessing to a new contract with minimum talk of a labor disruption.

But hopes for a new era of positive labor relations were diminished at the start of October, when workers at Xstrata's Kidd Creek metallurgical operations in Timmins, Ontario—formerly the possession of Noranda Inc. and Falconbridge—walked off the job. The prolonged dispute saw accusations from both sides of unfair bargaining tactics.

Unlike the earlier Sudbury and Thompson agreements, the Kidd Creek contract was unfortunate enough to be up for renewal at a time when the credit crisis was reaching a fever pitch, sending world markets and economies into a tailspin. It was undoubtedly not a moment when Xstrata would be easily willing to put more money on the table or make concessions on issues such as job security.

This all makes for an uneasy backdrop for some key negotiations in 2009, most notably at Vale Inco, where labor contracts in both Sudbury and at Voisey's Bay in Labrador are up for renewal.

When Vale Inco's Manitoba labor pact was reached, both sides expressed considerable admiration for each other that almost sounded gleeful. Les Ellsworth, the lead negotiator for the USW, went as far as saying he was "excited" about presenting the contract to workers, suggesting things went so well at Thompson that Sudbury negotiators had much to look forward to. "Sudbury, I believe, will get a good contract. They got a good start, let's put it that way," Ellsworth told AMM back in September.

But a Vale Inco spokesman was quick to point out that each contract negotiation is handled unto itself, and warned against drawing links between the two. That's probably prudent advice. While Thompson could serve as a framework for Sudbury, the Ontario operation has different cost scales, productivity levels, infrastructure requirements and other variables. And, of course, the acceleration of the financial crisis since September is sure to be felt at the bargaining table.

Sudbury has one of the most expensive work forces in the global base mining industry, and Brazil's Vale will set its agenda based on expected return on investment. Turning a profit in an era of depressed nickel prices, sluggish demand and high input costs for everything from explosives to fuel won't be an easy task. Open-ended bonuses based on the price of nickel could become a thing of the past. Many of the same challenges face Voisey's Bay, where the current labor contract expires at the end of March, two months before the Sudbury pact must be renewed.

Despite all these challenges, there are reasons to be optimistic. A work stoppage at Kidd Creek wasn't avoided, but union officials there are linking the core of the dispute to the inherited scars from the past and not to the new foreign ownership. "Our problems at Kidd were there long before Xstrata took over," Hemi Mitic, assistant to the president of the CAW, said. "I think the relationship has actually moved in a better direction. There is more openness, more sharing of information and consulting. At least at the local level there was a marked improvement, and we've noticed it in Sudbury as well."

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